Oil near two-week high on Russian supply worries

* West mulls more sanctions on Russian industries * Iraq starts production at giant West Qurna-2 field * Libya Mellitah condensate exports still blocked * Brent set for first quarterly decline in three quarters * Coming Up: U.S. Midwest business index at 1345 GMT (Updates detail, prices; U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov held talks on Sunday about ways